Financial Reporting

GAO provided a framework for analyzing federal agency financial statements, focusing on the: (1) conceptual considerations related to federal agency financial characteristics and users' information needs; (2) financial attributes of federal agencies and programs; (3) measures and indicators for the financial attributes; and (4) tools for analyzing financial information. GAO also presented an: (1) analysis of the Department of Veterans Affairs' financial statements for fiscal years 1986 through 1989; and (2) example of a description and analysis narrative that could be prepared following the application of the analytical framework.

GAO found that: (1) financial analysts must define a focus of analysis and understand their users' information needs; (2) federal programs constituted units of operations and budget decisions and each program could be viewed and analyzed as a federal government cost center; (3) financial attributes of federal programs and agencies included operating costs, operating results, operating efficiency, capital investments, financial obligations, efficiency in managing agency assets, and efficiency in managing agency administration costs; (4) the importance of financial attributes varied by type of program; (5) measures and indicators expressed financial attributes in quantitative terms; and (6) such analytical techniques as trend analysis, cross-sectional analysis, structural analysis, and causal factor analysis were available to further analyze financial information by identifying underlying events and circumstances.